The two sides have been holding their first formal talks since 1999
China and Taiwan have signed historic agreements to establish regular direct flights and allow more mainland tourists to visit the island.
The deal means there will be direct cross-strait flights every weekend, instead of just during holiday periods.
The development came at the first formal talks between the two sides for almost 10 years.
Ties have been tense for years but have improved rapidly since Taiwan President Ma Ying-jeou took office in May.
In contrast to his independence-leaning predecessor, Mr Ma wants warmer ties with Beijing and says his priority is maintaining regional stability.
Negotiators from Beijing and Taipei have been holding their first formal bilateral talks since 1999 at a state guesthouse in the Chinese capital.
On Thursday the two sides agreed to host permanent representative offices, and early on Friday they signed a deal to boost transport and tourism links, in a ceremony broadcast live on Chinese state television.
Ruled by separate governments since end of Chinese civil war in 1949
China considers the island part of its territory
China has offered a "one country, two systems" solution, like Hong Kong
Most people in Taiwan support status quo
The weekend passenger flights will begin on 4 July and there will be 36 flights each week, with China and Taiwan operating 18 flights each.
Previously direct flights were limited to four holiday periods each year. On other days, cross-strait travellers had to fly via Hong Kong or Macau.
From 18 July, each side will also allow in 3,000 tourists per day - a move that triples the number of mainland Chinese who will be allowed into Taiwan.
The move will be welcomed by Taiwanese businesses.
Improving economic links with Beijing was one of Mr Ma's election pledges, and the island anticipates a boost from the influx of tourists.
Better cross-strait ties will also appeal to China in the run-up to the Olympics.
China has attracted huge Taiwanese investment, and about half a million Taiwanese businessmen and their families live in the Shanghai area alone.
Beijing hopes direct communications will strengthen economic ties even further and make the Taiwan Strait much less of a flashpoint to worry about, says the BBC's China editor Shirong Chen.
Both sides say they hope that this round of negotiations will pave the way for regular dialogue.
'Long way to go'
China's top negotiator, Chen Yunlin, says he has accepted an invitation to visit Taiwan later this year and his Taiwanese counterpart, Chiang Ping-kun, said that there would be lots to talk about.
"There is still a long way to go for normalisation of cross-strait economic and trade exchange," he said.
"There are still many issues to be discussed including expanding weekend charter flights into regular charter flights."
And while economic ties may be on the up, on political issues the two sides remain apart.
China says that Taiwan is part of its territory, although the two have been separately governed since 1949, and continues to deny it recognition in the international arena.